April 8 (Bloomberg) -- American International Group Inc.
and the U.S. asked a judge to dismiss claims in a lawsuit by
former AIG Chief Executive Officer Maurice “Hank” Greenberg
challenging the government’s bailout.

AIG “would face incalculable harm” to its brand, image
and relationships with shareholders, customers, regulators and
elected officials if the company joined a suit against the
government brought by Greenberg’s Starr International Co. Inc.,
AIG said in asking the U.S. Court of Federal Claims in
Washington to uphold its decision not to join the litigation.

“AIG’s directors had every right to decide, in the
exercise of their business judgment, that suing the government
for its rescue of AIG is not the right thing for AIG to do, and
that AIG’s interests are better served by focusing on the future
and not joining litigation concerning the past,” according to
the filing.

The U.S. initially took a stake of 80 percent in AIG in
September 2008, increasing that to 92 percent as the aid package
swelled to $182.3 billion. The New York-based insurer repaid the
assistance last year.

AIG’s board on Jan. 9 unanimously agreed not to join
Starr’s suit, saying it was unlikely to succeed and risked
harming the insurer’s reputation after the bailout.

‘Negative Publicity’

Concerns about reputational harm “were confirmed for the
board by the wave of negative publicity triggered by the board’s
mere consideration of Starr’s demand,” AIG’s filing said.

Starr, a closely held investment company, initially sued
the government in 2011 for $25 billion, calling the public
assumption of the majority of AIG stock a seizure of property in
violation of the U.S. Constitution’s Fifth Amendment right to
fair compensation.

The motion to dismiss “only repeats the position taken by
the AIG board in January when it declined to take over and tried
to stop Starr from pursuing derivative claims on behalf of the
company,” Robert Dwyer, of Boies, Schiller & Flexner, Starr’s
law firm in the case, said in an e-mailed statement. “Starr
intends to oppose that motion.”

The motion, filed late Friday, seeks to dismiss only the
derivative claims asserted by Starr in AIG’s name.

A separate filing by the U.S. Justice Department asked
Judge Thomas Wheeler to dismiss Starr’s entire complaint,
including the claim of an illegal taking of property.

‘Further Support’

Justice Department lawyers cited an earlier ruling by
Wheeler that the government’s ownership interest in AIG
“provides further support for the view that plaintiffs have
standing to bring a direct claim.”

The government “today owns no AIG shares,” the Justice
Department said in its filing. “That factor provides further
support for the conclusion that Starr lacks standing to pursue
direct claims.”

The case is Starr International Co. v. U.S., 1:11-cv-00779,
U.S. Court of Federal Claims (Washington).